Despite ADNOC's takeover and the ongoing EU review, Covestro continues to operate prosperously.
In the industrial city of Leverkusen, plastics giant Covestro is navigating a regulatory hurdle that could impact the timeline of its planned takeover by the Arab oil company Adnoc. The European Commission has launched an in-depth investigation under its Foreign Subsidies Regulation (FSR) into Adnoc’s proposed €12bn acquisition of Covestro.
The EU's concerns revolve around possible distorting subsidies from the UAE. The Commission is scrutinising potential benefits such as an unlimited UAE guarantee and committed capital increase that might have allowed Adnoc to acquire Covestro on terms not aligned with market conditions. The decision on the transaction is expected by 2 December 2025, with the possibility of clearance, required remedies, or a prohibition of the deal.
Earlier this year, the Commission had cleared the deal on competition grounds. However, following notification under the Foreign Subsidies Regulation on 15 May, the Commission initiated this more focused review due to concerns over state support linked to a non-EU investor. Adnoc and Covestro continue to engage constructively with the Commission, maintaining optimism about the deal's closure in the second half of 2025, though the outcome depends on the investigation's findings.
Covestro's Chief Financial Officer, Christian Baier, has expressed continued skepticism about a fundamental breakthrough following the recent tariff agreement between the EU and the USA. Baier stated that the company is now watching the details of the tariff agreement, and tariff issues have overshadowed the initial optimism about seeing positive effects in the second half of the year.
Baier did not indicate a change in his previous stance that there are no short-term recovery prospects for Covestro's current business figures. He expressed a desire for Covestro to invest heavily in Germany, but not blindly. Baier also called on the federal government to strengthen investments in Germany.
Despite the ongoing review, Baier stated that the EU investigation has not created any new uncertainty. The recent tariff agreement between the EU and the USA is not yet seen as a significant development by Baier. It's important to note that the EU's investigation does not affect the competition clearance granted earlier this year.
In conclusion, the EU’s review is a significant regulatory hurdle that could impact the timing or viability of Adnoc’s takeover of Covestro due to potential distortions from foreign state subsidies. The ongoing takeover discussions between Covestro and Adnoc remain constructive, and both parties continue to engage with the Commission. The final outcome of the investigation will determine whether the deal proceeds as planned.
[1] Handelsblatt, 2025 [2] Reuters, 2025 [3] European Commission Press Release, 2025 [4] Covestro Press Release, 2025
[1] The regulatory hurdle posed by the EU's investigation under the Foreign Subsidies Regulation (FSR) could potentially impact the business of plastics giant Covestro, as it navigates a €12bn takeover by the Arab oil company Adnoc in the finance sector. [2] The investigation's findings will determine whether the industrial deal proceeds as planned, with the Commission scrutinizing potential distorting subsidies from the UAE that might have influenced the acquisition's terms.
